In a bid to encourage first time home buyers and promote affordable housing, the Karnataka government in its Budget on Monday announced a reduction in stamp duty to 3 per cent from existing 5 per cent for apartments valued between Rs 35 lakh and Rs 45 lakh. The announcement comes in the wake of neighbouring Maharashtra seeing a major boost in housing sales due to a limited-period stamp duty cut last year.
The announcement could have a positive impact in certain micro-markets and on buyers' sentiment. "More than the numbers - the reduction from 5 to 3 per cent - such moves impact home buying sentiment positively, in turn seeing a positive domino effect on 270-plus industries which are ancillary to real estate and construction," says NAREDCO President Niranjan Hiranandani.
However, as per ANAROCK Research, Bengaluru presently has total unsold stock of nearly 59,350 units across all budget segments. Of this, just 24 per cent units are within Rs 45 lakh price bracket, while 64 per cent are within Rs 45 lakh to Rs 1.5 crore price range.
Anuj Puri, Chairman of ANAROCK Property Consultants, feels that though the stamp duty cut is a feel-good factor, it is unlikely to provide a significant boost to housing sales in Bengaluru on the lines of what was seen in Mumbai after rate cuts across all segments.
"The fact is that housing demand in Bengaluru is largely skewed towards the mid segment, involving properties priced within the Rs 50 lakh to Rs 1 crore budget range. For these properties, the stamp duty charges remain the same at nearly 5 per cent," Puri said.
Echoing similar view, Rajendra Joshi, CEO of Residential Brigade Enterprises Ltd, says it would have been far more beneficial if the stamp duty cut was extended to other segments as well, given the burgeoning rate of expansion not only in Bengaluru but also the rest of the state.
"While the stamp duty benefit has been currently declared for the fiscal year 2021-22, we need to keep in mind that the cycle of planning to execution to registration of properties is significantly longer," he added.